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Restaurateurs Concerned About Rise of Discount Sites

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Over the past year or two, all kinds of discount sites including Blackboard Eats, Village Vines, OpenTable's new program, Gilt City, and most notably, Groupon, have arisen offering diners the chance to pretty much never pay full price for a meal. And while some restaurateurs welcome the opportunities to bring in new business, others, unsurprisingly are worried about how they cut into the margins. A Crain's article explains that when a customer buys a coupon—$25 for $50 off a future meal for example—50 percent of the purchase goes to Groupon, the other 50 to the restaurant. Not only does that mean a restaurateur gets a quarter of what he would have normally gotten, but it also means he'll get more first time (and often one time only) customers. Tracy Nieporent of Myriad Group (Nobu, Corton, Tribeca Grill) says of the sites, "A lot of them are like mosquitoes on your back...They suck your blood and give you a little sting, and they all perceive us as a way to make money."

Others argue that a low paying customer is better than no customer at all. Also, that customer may bring friends, may spread the word, and may forget to show before the coupon expires. It's the same reasoning behind any deal, including the popular bi-annual restaurant weeks here in New York. The problem with these sites is, the control of the deal is ceded to a third party. And restaurants of a certain tier are increasingly pressured to join in.
· Dining discounts make some restaurateurs sick [Crain's]

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